A federal agency received utility bills before the end of the fiscal year. It is the agency's policy to obligate funds upon receipt of the utility…

A In federal accounting, upon receipt of utility bills (and before payment), a government agency records an obligation. Since the service has already been received and payment is imminent, the budgetary accounting entry reduces available allotments and records the obligation. The entry would look like: Debit: Allotment Available for Commitment/Obligation Credit: Undelivered Orders – Unpaid (or potentially Delivered Orders – Unpaid, depending on agency policy) In the case of immediate payment, the next step would move from obligation to expenditure, but the initial obligation entry affects the budgetary accounts as described above. Relevant Reference: FASAB SFFAS No. 7 – Budgetary Accounting Treasury Financial Manual (TFM) – Budgetary Transactions OMB Circular A-11 Answer : A. Debit Allotment Available for Commitment/Obligation / Credit Undelivered Orders Unpaid